Part 1: The CTO Dilemma

For a lot of startups, especially startups with non-technical founders, hiring technical people or finding a CTO can be incredibly difficult. The CTO that ends up being chosen will have a lasting impact on the organization because the tech leaders they choose will have biases, philosophies, processes and mindsets that will permeate throughout the organization, whether the CTO stays for the long run or not.

The CTO will ultimately be the one making most technical hiring decisions early on, and the best ones will probably continue to until it’s no longer manageable to do so. In a lot of cases the long-term success of the entire engineering department rests largely on the CTO choice the non-technical founder makes early on.

Clones

For companies just starting out, early hires run the risk of becoming ‘clones’ of the CTO, despite best, genuine efforts of the CTO to be unbiased and open-minded. It starts with the job descriptions and tech choices, and ends with the final judgment call of a prospective employee.

This may or may not be a bad thing. The issue is, however, that early-stage CTOs can be very difficult to find, and the best ones, having many options, are going to be very critical of the business, the team, the role etc, and obviously very expensive (even if in the form of equity). Most startups will have to settle for what their company can attract and afford, and will need to be honest with themselves about how much leverage they have with the team, idea and potential of the business.

The problem is if you have to settle for a B-Grade or even C-Grade CTO, this could end up attracting B-Grade & C-Grade talent throughout the engineering department that’ll end up running the ‘top’ of the department, while A-Grade players are added beneath them when the organization improves their leverage in hiring.

What happens when your company grows and is able to attract A-players, but they end up being managed by the tenured B-players and C-players? I'd say that could be a potential problem based on what I know about human nature, especially if there's a lot of money on the line.

With full-time, permanent W2 employees, ‘cleaning house’ would be virtually impossible and at the very least pretty unethical and controversial. In most cases cleaning house would also be unnecessary, but for projects that require top engineering talent this situation could end up ‘breaking’ the business.

Alternatives

With 1099 or C2C it’s almost implied the working relationship is not long-term, though they certainly can be. If it’s a good relationship, 1099/C2C contractors will be highly incentivized and motivated to provide value to ensure contract renewal, and if it’s not a great relationship, for either party, it may just naturally fizzle out — no harm no foul. 

For early stages of a startup, leveraging 1099/C2C workers can have many advantages over traditional W2 employment, including tax advantages. Eventually, once product/market fit has been established and the company is either profitable or has raised a significant amount of capital, the right in-house team can be built with the leverage and resources the startup has built up over time.

The potential of even acquiring C2C partners or agencies is another exciting possibility, like an instant acquisition of tens or even hundreds of employees that could take a year or more to fill otherwise.

Partners

At the end of the day, the most important thing is to be careful who you choose to partner with, and don't just assume if you're non-technical that you need to find a CTO to start. In fact, I think the longer you can defer that decision the better, assuming you can still manage to build your product. That is the premise behind Dreltek LLC, to help you build your product in the early stages without a CTO, and help you find the right CTO when the time is right.